Persistent Link:
http://hdl.handle.net/10150/196026
Title:
Equity Incentives of Target CEOs Preceding Acquisition
Author:
Heitzman, Shane
Issue Date:
2006
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
In this dissertation, I investigate the magnitude, determinants, and consequences of equity grants to target firm CEOs prior to acquisitions. The board can use equity grants to compensate the CEO for selling the firm and increase his incentive to negotiate a better price with the acquirer, resulting in a higher premium. An opportunistic CEO can obtain equity grants to increase his share of takeover gains, and when the costs of opportunism exceed the benefits of incentive alignment, takeover premiums will be lower. I find that unexplained grants do not increase prior to an acquisition. However, I do find that board independence is associated with larger grants in the year before the acquisition for target CEOs and smaller grants in earlier years. In general, board independence is negatively associated with equity grants in target but non non-target firms. Further, I find that abnormal equity grants predicted by governance factors are positively associated with total takeover premiums. Overall, the evidence suggests that equity grants to target CEOs prior to a takeover are consistent with incentive alignment in the takeover process. There is no evidence to suggest that target CEOs use their power to obtain excessive grants at the expense of shareholders.
Type:
text; Electronic Dissertation
Degree Name:
PhD
Degree Level:
doctoral
Degree Program:
Management; Graduate College
Degree Grantor:
University of Arizona
Advisor:
Dhaliwal, Dan
Committee Chair:
Dhaliwal, Dan

Full metadata record

DC FieldValue Language
dc.language.isoENen_US
dc.titleEquity Incentives of Target CEOs Preceding Acquisitionen_US
dc.creatorHeitzman, Shaneen_US
dc.contributor.authorHeitzman, Shaneen_US
dc.date.issued2006en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractIn this dissertation, I investigate the magnitude, determinants, and consequences of equity grants to target firm CEOs prior to acquisitions. The board can use equity grants to compensate the CEO for selling the firm and increase his incentive to negotiate a better price with the acquirer, resulting in a higher premium. An opportunistic CEO can obtain equity grants to increase his share of takeover gains, and when the costs of opportunism exceed the benefits of incentive alignment, takeover premiums will be lower. I find that unexplained grants do not increase prior to an acquisition. However, I do find that board independence is associated with larger grants in the year before the acquisition for target CEOs and smaller grants in earlier years. In general, board independence is negatively associated with equity grants in target but non non-target firms. Further, I find that abnormal equity grants predicted by governance factors are positively associated with total takeover premiums. Overall, the evidence suggests that equity grants to target CEOs prior to a takeover are consistent with incentive alignment in the takeover process. There is no evidence to suggest that target CEOs use their power to obtain excessive grants at the expense of shareholders.en_US
dc.typetexten_US
dc.typeElectronic Dissertationen_US
thesis.degree.namePhDen_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineManagementen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorDhaliwal, Danen_US
dc.contributor.chairDhaliwal, Danen_US
dc.contributor.committeememberBens, Danielen_US
dc.contributor.committeememberTrombley, Marken_US
dc.identifier.proquest1750en_US
dc.identifier.oclc659747506en_US
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